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The interaction between two species of gadoid and a shrimp stock was studied in a 40 km long two-armed fjord in north-west Iceland. On the basis of acoustic and trawl surveys in 2005 and 2006, immature cod Gadus morhua and haddock Melanogrammus aeglefinus were found to migrate to the inner part of the fjord in late summer, concurrent with rising temperatures. At the same time, the local northern shrimp Pandalus borealis stock retreated into the north-east arm of the fjord. Vertical distribution of acoustic targets indicated that a significant and temporally variable fraction of the gadoids was inaccessible to the trawl. Shrimp was a significant part of the diet of immature G. morhua, except in June 2006 when euphausiids comprised most of the diet of both G. morhua and M. aeglefinus. Shrimp was only a minor part of the diet of M. aeglefinus. An on-off relationship was observed in the catches of gadoids and shrimp. In hauls with large catches of gadoids, few shrimp were found and vice versa, indicating avoidance reaction at this spatial scale. The cooling in winter may have driven the gadoids to the outer parts of the fjord, which in turn may have aided in the dispersal of the shrimp stock in the following months., (© 2011 The Authors. Journal of Fish Biology © 2011 The Fisheries Society of the British Isles.)